{"id":687345,"date":"2025-08-27T06:05:13","date_gmt":"2025-08-27T03:05:13","guid":{"rendered":"https:\/\/buradabiliyorum.com\/en\/the-hot-crazy-matrix-explains-why-investors-get-tech-deals-wrong\/"},"modified":"2025-08-27T06:05:13","modified_gmt":"2025-08-27T03:05:13","slug":"the-hot-crazy-matrix-explains-why-investors-get-tech-deals-wrong","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/the-hot-crazy-matrix-explains-why-investors-get-tech-deals-wrong\/","title":{"rendered":"The Hot Crazy Matrix explains why investors get tech deals wrong"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3c66521e157\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3c66521e157\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/the-hot-crazy-matrix-explains-why-investors-get-tech-deals-wrong\/#Lessons_for_private_equity_from_an_internet_meme\" >Lessons for private equity from an internet meme<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/the-hot-crazy-matrix-explains-why-investors-get-tech-deals-wrong\/#How_to_spot_danger\" >How to spot danger<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/the-hot-crazy-matrix-explains-why-investors-get-tech-deals-wrong\/#_Wife_material\" >\u00a0Wife material<\/a><\/li><\/ul><\/nav><\/div>\n<div id=\"article-main-content\">\n<p><span style=\"font-weight: 400;\">Private equity deals hit an all-time high in 2021, peaking at a total value of <\/span><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/kpmg.com\/us\/en\/articles\/2022\/2021-record-shattering-year-pe-ma.html#:~:text=PE%20deal%20volume%20and%20deal,of%20many%20high%2Dvalue%20transactions.\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">more than $1tn<\/span><\/a><span style=\"font-weight: 400;\">, with an average deal size <\/span><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.bain.com\/about\/media-center\/press-releases\/2022\/global-pe-report-2022\/\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">exceeding $1bn<\/span><\/a><span style=\"font-weight: 400;\"> for the first time. Founders were <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a> darlings, valuations soared, and investors raced to get a piece of the action.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By 2023, many of those same companies \u2014 such as Klarna and S<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/trip-and-travel\/\" data-internallinksmanager029f6b8e52c=\"10\" title=\"Trip &amp; Travel\" target=\"_blank\" rel=\"noopener\">trip<\/a>e \u2014 had lost billions in value. Klarna\u2019s valuation plummeted by 85% from its 2021 peak of $45.6bn to $6.7bn in 2022. Stripe also fell dramatically, from $95bn in 2021 to $50bn in 2023.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Fast forward to today, and even more tech companies are folding, from no-code platform Builder.ai to fintechs <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.reuters.com\/business\/finance\/jpmorgan-had-buyers-remorse-lawyer-says-startup-founders-trial-starts-2025-02-21\/\" target=\"_blank\" rel=\"nofollow noopener\">Frank<\/a> and <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2025-07-10\/deloitte-azets-audits-of-fintech-stenn-investigated-by-uk\" target=\"_blank\" rel=\"nofollow noopener\">Stenn<\/a>. Yet investors are still ploughing fortunes into risky ventures \u2014 particularly in AI. Case in point: the Thinking Machine Labs raised an eye-watering $2bn seed round without a single proven product.\u00a0\u00a0<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In a race to invest in the latest, most eye-catching tech, <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ist investors with money to spend are focusing on personalities and promises, failing to scrutinise product value, market fit, and opportunity.\u00a0\u00a0<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<div class=\"inarticle-wrapper latest channel-cta hs-embed-tnw\">\n<div id=\"hs-embed-tnw\" class=\"channel-cta-wrapper\">\n<div class=\"channel-cta-img\"><img decoding=\"async\" class=\"js-lazy\" src=\"https:\/\/s3.eu-west-1.amazonaws.com\/tnw.events\/hardfork-2018\/uploads\/visuals\/tnw-newsletter.png\"\/><\/div>\n<p><img decoding=\"async\" src=\"https:\/\/s3.eu-west-1.amazonaws.com\/tnw.events\/hardfork-2018\/uploads\/visuals\/tnw-newsletter.png\"\/><\/p>\n<div class=\"channel-cta-input\">\n<p class=\"channel-cta-title\">The \ud83d\udc9c of EU tech<\/p>\n<p class=\"channel-cta-tagline\">The latest rumblings from the EU tech scene, a story from our wise ol&#8217; founder Boris, and some questionable AI art. It&#8217;s free, every week, in your inbox. Sign up now!<\/p>\n<\/div>\n<\/div>\n<\/div>\n<p><span style=\"font-weight: 400;\">With <\/span><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.bain.com\/insights\/private-equity-midyear-report-2025\/\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">$1.2tn in buyout dry powder<\/span><\/a><span style=\"font-weight: 400;\">\u00a0still waiting to be invested \u2014 around a quarter of it idle for four years or more \u2014 pressure on dealmakers is intensifying. And when investors start chasing opportunities without much scrutiny, their behaviour starts to look like dating on impulse. It calls to mind a meme: the Hot Crazy Matrix.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Lessons_for_private_equity_from_an_internet_meme\"><\/span>Lessons for private equity from an internet meme<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The Hot Crazy Matrix emerged in <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.youtube.com\/watch?v=pInk1rV2VEg\" target=\"_blank\" rel=\"nofollow noopener\">a viral YouTube video<\/a> from the noughties. It offered a \u201cscientific\u201d framework for evaluating women based on two axes: \u201chot\u201d and \u201ccrazy.\u201d Problematic? Absolutely. But also, weirdly <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>licable to private equity.\u00a0<\/span><\/p>\n<figure class=\"post-image post-mediaBleed aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1414818 js-lazy\" alt=\"Screenshot of the Hot Crazy Matrix YouTube video\" width=\"728\" height=\"546\" src=\"https:\/\/cdn0.tnwcdn.com\/wp-content\/blogs.dir\/1\/files\/2025\/08\/2YqKKHdg.jpg\"\/><figcaption>This chart doubles as a startup investor guide. Credit: <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.youtube.com\/watch?v=pInk1rV2VEg\" target=\"_blank\" rel=\"nofollow noopener\">Tactical Response Crew \/ YouTube<\/a><\/figcaption><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1414818\" src=\"https:\/\/cdn0.tnwcdn.com\/wp-content\/blogs.dir\/1\/files\/2025\/08\/2YqKKHdg.jpg\" alt=\"Screenshot of the Hot Crazy Matrix YouTube video\" width=\"728\" height=\"546\" srcset=\"\"\/><\/figure>\n<p><span style=\"font-weight: 400;\">Now, before anyone gets HR involved, we\u2019re not rating investors on physical attractiveness. In this version, the \u201chot,\u201d horizontal axis represents specialism. The more niche your expertise, the further right you sit on the chart. Think of it as an investor who knows how to speak the language. Someone who gets the investment thesis right off the bat.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Then there\u2019s the \u201ccrazy,\u201d vertical axis. In our private equity version, it represents how big and bold a fund is. At the bottom: large, generic investors who skim the pitch deck and call it research. At the top: niche, smaller operators who actually understand what they\u2019re buying and how to build value.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_to_spot_danger\"><\/span>How to spot danger<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The left-hand side of the matrix \u2014 the no-go area \u2014 in this scenario doubles up as our danger zone. This is where we see large, generic funds with deep pockets throwing huge sums at investments without specific understanding or knowledge of the sector, product or commercial proposition. These guys jump in with limited ability to interrogate the details. This isn\u2019t business \u2014 it\u2019s gambling! A bit of fun while it lasts, but don\u2019t be surprised if you end up losing your shirt.\u00a0<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To illustrate my point, see Exhibit A: Builder.ai.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Dazzled by the promise of a revolutionary new AI-powered platform, investors, including Microsoft and Qatar\u2019s Sovereign Wealth Fund, poured more than $450mn into the business, pushing its valuation past $1bn. But beneath the glossy pitch, critical flaws went unnoticed: revenue figures had been overstated by 300%, and tasks marketed as AI-generated were actually being completed by a large team of human workers. The oversight was costly \u2014 and a stark reminder that deep pockets without deep understanding can lead to expensive missteps. The investors would sit on the left-hand side of our matrix.<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On the other end of the scale, we\u2019ve got the niche specialists. These PE investors know their stuff, but they\u2019re often smaller. And while brains are great, a growing business needs brawn too \u2014 a firm that can actually move the needle.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"_Wife_material\"><\/span>\u00a0Wife material<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">In the sweet spot \u2014 or \u201cmarriage zone\u201d \u2014 is a fund that\u2019s big enough to commit to a full buyout, but also knowledgeable enough to unlock real value in its niche sector, A capital markets data company, for instance.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s a virtuous circle: expertise guides the investment, and the investment, in turn, builds even greater expertise.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But what about the mythical unicorn? Does a huge private equity firm with deep, specialist expertise exist? Maybe. But finding one is like dating someone who\u2019s rich, kind, funny, and knows how to fix your Wi-Fi. Possible, but you might be waiting a while.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In private equity, as in dating, it pays to look beyond the surface. Flashy pitch decks and billion-dollar valuations might be tempting, but if you don\u2019t know what you\u2019re getting into, you might wake up next to a portfolio full of regrets. When capital is abundant, but clarity is scarce, private equity needs more than just enthusiasm \u2014 it needs discernment.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Hot Crazy Matrix may be a pithy internet meme, but its reimagining offers a serious lesson: the smartest investors aren\u2019t chasing the hottest trends \u2014 they\u2019re bringing together deep expertise with commercial insight. Because in the end, just like marriages, the best deals aren\u2019t the flashiest \u2014 they\u2019re the ones that last.\u00a0<\/span><\/p>\n<\/p><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMN63nwsw68G3Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more like this article, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" target=\"_blank\" >Technology category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thenextweb.com\/news\/hot-crazy-matrix-investors-tech-startups\" target=\"_blank\" >Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Private equity deals hit an all-time high in 2021, peaking at a total value of more than $1tn, with an average deal size exceeding $1bn for the first time. Founders were media darlings, valuations soared, and investors raced to get a piece of the action.\u00a0\u00a0 By 2023, many of those same companies \u2014 such as&#8230;<\/p>\n","protected":false},"author":1,"featured_media":687346,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/img-cdn.tnwcdn.com\/image\/tnw-blurple?filter_last=1&fit=1280%2C640&url=https%3A%2F%2Fcdn0.tnwcdn.com%2Fwp-content%2Fblogs.dir%2F1%2Ffiles%2F2025%2F08%2FUntitled-design-6.jpg&signature=901a4c7b269a6dcaeaa6c443d0e6c338","fifu_image_alt":"","footnotes":""},"categories":[18],"tags":[],"class_list":["post-687345","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/687345","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=687345"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/687345\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/687346"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=687345"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=687345"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=687345"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}